Should I Take Social Security Early at 62 or Wait Until 67 for More Benefits?

It’s one of the biggest dilemmas (soon-to-be) retirees will face as soon as they hit age 62: take the Social Security benefits early or leave them? Undoubtedly, it’s quite a divisive topic, but there really is no right answer for everyone. Of course, if one can not touch the benefits until they’re 67, they’ll receive a greater sum. For those who opt to start receiving benefits at 67 instead of 62, they’ll earn a pretty decent risk-free return each year they go without. Of course, money in the present is worth more than money in five years or even one year from now. And while you’ll get some percentage more every year you choose to forego receiving Social Security, one must also consider the time value of money.

Perhaps such a retiree will run into health problems, mobility issues, or a devastating diagnosis that would make a greater sum of cash in the future not worth nearly as much as it would in their hands some number of years younger. Of course, the financial situation and retirement plans should be taken into consideration as well. And perhaps a middle ground (opting in at 64 or 65) could be more optimal, depending on the individual’s circumstances.

In this piece, we’ll weigh in a few key factors that should influence one’s decision of whether to take the benefits sooner or put it off to get more in the future.

The upside of delaying Social Security until age 67

Of course, the upside of delaying Social Security is that one will get more money down the road. And while someone could take the cash earlier and invest it in stocks to score a better return, I’m inclined to think that the lower, risk-free rate will always be the better deal, especially if interest rates continue to decline from current levels. If you’re in great health, maintain an active lifestyle with a balanced diet and expect to live a long life (perhaps to 100?), delaying would, of course, be the best course of action. 

But, as I mentioned in prior pieces, delayed gratification can work against one when their time is more scarce than financial resources. As such, if one could use a jolt of extra income and is retired (or soon to be retiring), I see greater utility in opting in earlier, even for a smaller sum.

The upside of opting in sooner (at 62)

It’s hard to know how long you’ll live. And it’s often reckless to give in to FOMO (fear of missing out) as one enters their golden years. Indeed, running out of money in retirement is the bigger fear of American retirees than dying young. If one’s in an otherwise decent financial position and doesn’t need the extra cash Social Security provides, choosing to receive benefits sooner comes down to personal preferences.

A healthy 62-year-old would probably be better able to have more experiences and take off more items on their bucket list than a 67-year-old who will have increasing cash inflows but decreasing expenditures. Perhaps it all comes down to how much one wants to leave behind to loved ones and cherished causes. If you’re 62, don’t need the income boost, but have a child or grandchild who’s struggling financially, perhaps opting in early to give them a piece of the Social Security check could be a wise move to consider.

In any case, someone who really doesn’t know the right move should take their time and weigh the pros and cons. Perhaps bringing on a financial advisor could help one make a decision that makes the most sense. If in doubt and one really doesn’t need any extra cash today, however, I believe it’s best to err on the side of caution by delaying Social Security benefits if one can. At the worst, you’ll have more money to leave behind for heirs.

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